Telecommunications and internet group SoftBank is considering a $1bn investment in US-based workspace provider We Company, the Financial Times reported yesterday.
SoftBank, already We Company’s largest investor, had an agreement in place to provide $1.5bn in warrant financing for in April 2020, but may increase the size of the commitment while buying shares at a reduced valuation, people briefed on the matter told the FT.
We Company’s main offering is shared workspace network WeWork, but it had planned to expand into adjacent areas such as accommodation and education. It selected the Nasdaq Global Select Market for its initial public offering two weeks ago and was reportedly targeting up to $4bn in the IPO.
However, reports that We Company was set to float at a $15bn to $20bn valuation, a steep drop from the $47bn valuation at which it last raised funding in January 2019, led to the IPO being suspended last week.
The company has said it plans to float by the end of 2019 but has not set a firm time frame. In the meantime, founder Adam Neumann has stepped down as CEO and given up majority control, and significant cost-cutting measures are reportedly being considered.
Companies acquired by We Company including office services provider Managed by Q are said to be on the block, while a significant proportion of its 12,500-strong workforce could be fired as non-core parts of the business are shut down. It is also halting any new lease agreements.
SoftBank was reportedly set to buy as much as $750m of shares in the We Company IPO. It agreed in November 2018 to supply $3bn in warrant financing to the company over two tranches at a $42bn valuation, one of which is still to come.
Not including the warrant financing, We Company has raised a total of $11.5bn in debt and equity financing as of the $2bn investment by SoftBank in January, following $1bn in convertible note financing in August 2018.
The company had initially received $300m from SoftBank in March 2017 at a $17bn valuation, before joining its Vision Fund to invest a further $3bn in primary and secondary funding four months later, in addition to $1.4bn for subsidiaries in Japan, China and the Asia Pacific region.
Hotel chain Shanghai Jin Jiang International and private equity firm Hony Capital had contributed to a $690m series F round that closed in 2016 alongside unnamed existing new and existing investors.
Investment and financial services firm Fidelity Management and Research was among the company’s existing backers at that point, as were Goldman Sachs, JP Morgan Investment Management, T. Rowe Price, Benchmark and clients of Wellington Management Company.
